(Reuters) -Australia’s Westpac Banking Corp reported a 16% drop in its first-half net profit on Monday as intense lending competition and higher costs squeezed its margins.
It also announced an increase of A$1 billion ($660.90 million) to an existing share buyback program, taking it up to A$2.5 billion.
A rise in borrowing costs and increased competition for lending have prompted banks to cut rates on loans despite having to pay depositors more interest, squeezing their margins.
As a result, Westpac’s net interest margin for the six months ended March 31 slipped to 1.89%, down 7 basis points from a year ago. Its net profit came in at A$3.34 billion, compared with A$4.00 billion a year earlier.
That slightly missed Visible Alpha consensus estimate of A$3.43 billion compiled by UBS.
It declared an interim dividend of 75 Australian cents per share and a special dividend of 15 cents apiece.
($1 = 1.5131 Australian dollars)
(Reporting by Sameer Manekar and Rajasik Mukherjee in Bengaluru; Editing by Lisa Shumaker)
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